nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒02‒12
fifteen papers chosen by
Karl Petrick
Western New England University

  1. "Complementary Currencies and Economic Stability" By Dimitri B. Papadimitriou
  2. "A Complementary Currency and Direct Job Creation Hold the Key to Greek Recovery" By Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza
  3. "Gender Dimensions of Inequality in the Countries of Central Asia, South Caucasus, and Western CIS" By Tamar Khitarishvili
  4. A Critique of Modern Money Theory and the Disequilibrium Dynamics of Banking and Government Finance By Tianhao Zhi
  5. Economics and the Near-Death Experience of Democratic Governance By June Sekera
  6. "The 2030 Sustainable Development Goals and Measuring Gender Inequality: A Technical Articulation for Asia-Pacific" By Bhavya Aggarwal; Lekha S. Chakraborty
  7. Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement By Jeronim Capaldo; Alex Izurieta; Jomo Kwame Sundaram
  8. Changing the world one student at a time? Uncovering subjective understandings of economics instructors' roles By Katarzyna Gruszka; Annika Scharbert; Michael Soder
  9. Technological change in developing countries: Trade-offs between economic, social, and environmental sustainability By Massa, Isabella
  10. Industrial Policy: A Guide for the Perplexed By Uri Dadush
  11. Stagnation Traps By Gianluca Benigno; Luca Fornaro
  12. Education through the lens of sustainable human development By Gianna Alessandra Sanchez Moretti
  13. Does technological change drive inclusive industrialization? : A review of major concepts and findings By Gries, T.; Grundmann, R.; Palnau, I.; Redlin, M.
  14. Ecological Macreconomics: Introduction and Review By Armon Rezai; Sigrid Stagl
  15. When economists and ecologists meet on Ecological Economics: two science paths around two interdisciplinary concepts By Olivier Petit; Franck-Dominique Vivien

  1. By: Dimitri B. Papadimitriou
    Abstract: A complementary currency circulates within an economy alongside the primary currency without attempting to replace it. The Swiss WIR, implemented in 1934 as a response to the discouraging liquidity and growth prospects of the Great Depression, is the oldest and most significant complementary financial system now in circulation. The evidence provided by the long, successful operation of the WIR offers an opportunity to reconsider the creation of a similar system in Greece. The complementary currency is a proven macroeconomic stabilizer--a spontaneous money creator with the capacity to sustain and increase an economy's aggregate demand during downturns. A complementary financial system that supports regional development and employment-targeted programs would be a U-turn toward restoring people's purchasing power and rebuilding Greece's desperate economy.
    Date: 2016–01
  2. By: Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza
    Abstract: Even under optimistic assumptions, the policy status quo being enforced in Greece cannot be relied upon to help recover lost incomes and employment within any reasonable time frame. And while a widely discussed public investment program funded by European institutions would help, a more innovative, better-targeted solution is required to address Greece's protracted unemployment crisis: an "employer of last resort" (ELR) plan offering paid work in public projects, financed by issuing a nonconvertible "fiscal currency"--the Geuro.
    Date: 2016–01
  3. By: Tamar Khitarishvili
    Abstract: The collapse of the Soviet Union initiated an unprecedented social and economic transformation of the successor countries and altered the gender balance in a region that counted gender equality as one of the key legacies of its socialist past. The transition experience of the region has amply demonstrated that the changes in the gender balance triggered by economic shifts are far from obvious, and that economic expansion and women's economic empowerment do not always go hand in hand. Therefore, active measures to enhance women’s economic empowerment should be of central concern to the policy dialogue aimed at poverty and inequality reduction and inclusive growth. In this paper, we establish the current state of various dimensions of gender inequalities and their past dynamics in the countries of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan), South Caucasus (Armenia, Azerbaijan, and Georgia), and Western CIS (Belarus, Moldova, and Ukraine), and propose steps aimed at reducing those inequalities in the context of inclusive growth, decent job creation, and economic empowerment.
    Keywords: Gender Economics, Inequality, Transition Countries, Human Development, Western CIS, Central Asia, South Caucasus
    JEL: J16 P2
    Date: 2016–01
  4. By: Tianhao Zhi (Finance Discipline Group, UTS Business School, University of Technology, Sydney)
    Abstract: This paper critically reviews and examines the relationship between the origin of disequilibrium macroeconomic thinking by John Maynard Keynes, and the development of Keynesian disequilibrium macroeconomic models. Given that the two strands of literature are both plentiful, I will focus on discussing the essence of Keynesian disequilibrium thinking, and its implications of relevant models in the context of Keynes-Metzler-Goodwin and Weidlich-Haag-Lux approaches.
    Keywords: disequilibrium macroeconomics; nonlinear economic dynamics; John Maynard Keynes; Hyman Minsky
    JEL: B22 E5 E12 G21
    Date: 2016–02–01
  5. By: June Sekera
    Abstract: In this paper I trace the connection between mainstream, market-centric economics and what James Galbraith has called “the collapse of the public governing capacity.” Marketization and its confederate, privatization, have led, sometimes intentionally, to the evisceration of governmental capacity, the downsizing of democracy and the dismantling of traditions of responsible public administration that are grounded in law and the Constitution.
    Date: 2015–05
  6. By: Bhavya Aggarwal; Lekha S. Chakraborty
    Abstract: Against the backdrop of the 2030 UN Agenda for Sustainable Development, this paper analyzes the measurement issues in gender-based indices constructed by the United Nations Development Programme (UNDP) and suggests alternatives for choice of variables, functional form, and weights. While the UNDP Gender Inequality Index (GII) conceptually reflects the loss in achievement due to inequality between men and women in three dimensions--health, empowerment, and labor force participation--we argue that the assumptions and the choice of variables to capture these dimensions remain inadequate and erroneous, resulting in only the partial capture of gender inequalities. Since the dimensions used for the GII are different from those in the UNDP's Human Development Index (HDI), we cannot say that a higher value in the GII represents a loss in the HDI due to gender inequalities. The technical obscurity remains how to interpret GII by combining women-specific indicators with indicators that are disaggregated for both men and women. The GII is a partial construct, as it does not capture many significant dimensions of gender inequality. Though this requires a data revolution, we tried to reconstruct the GII in the context of Asia-Pacific using three scenarios: (1) improving the set of variables incorporating unpaid care work, pay gaps, intrahousehold decision making, exposure to knowledge networks, and feminization of governance at local levels; (2) constructing a decomposed index to specify the direction of gender gaps; and (3) compiling an alternative index using Principal Components Index for assigning weights. The choice of countries under the three scenarios is constrained by data paucity. The results reveal that the UNDP GII overestimates the gap between the two genders, and that using women-specific indicators leads to a fallacious estimation of gender inequality. The estimates are illustrative. The implication of the results broadly suggests a return to the UNDP Gender Development Index for capturing gender development, with an improvised set of choices and variables.
    Keywords: Gender Inequality; Unpaid Work; Human Development; Composite Indicator
    JEL: D63 J16 J31 O15
    Date: 2016–02
  7. By: Jeronim Capaldo; Alex Izurieta; Jomo Kwame Sundaram
    Abstract: Proponents of the Trans-Pacific Partnership agreement (TPP) emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited projections suggest modest GDP gains after ten years, varying from less than half a percentage point in the United States to 13 percent in Vietnam. However, these projections assume full employment and constant income distribution in all countries excluding some of the major risks of trade liberalization. In this paper, we provide alternative projections of the TPP’s economic effects using the United Nations Global Policy Model. Allowing for changes in employment and income distribution, we obtain very different results. We find that the benefits to economic growth are even smaller than those projected with full-employment models, and are negative for Japan and the United States. More important, we find that the TPP will likely lead to losses in employment and increases in inequality.
    Date: 2016–01
  8. By: Katarzyna Gruszka (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria); Annika Scharbert (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria); Michael Soder (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria)
    Abstract: In the wake of the economic crisis, a number of student organisations and researchers came together to highlight the lack of pluralism and heterodox approaches in economics curricula. The high relevance of the pluralism debate becomes clear once set within the considerations of the implications of a given scientific discourse on reality. This is especially relevant for social sciences, where reality-creating is visible in e.g. the influence of economists on policy making. This study explores the role of instructors in co-constructing the dynamics of the pluralism discourse and debates. An empirical field study is conducted with lecturers in introductory economics courses at the WU Vienna University of Economics and Business where they place themselves within the pluralism discourse via a Q-study. Q is a mixed method typically employed for studying subjectivity inherent to a given, socially contested topic. It begins with a set of statements that undergo a sorting procedure on a relative ranking scale, and finishes with factorrendering. Four voices are identified: Moderate Pluralist, Mainstreamers, Responsible Pluralists, and Applied Pluralists. The implications of the ideas brought by these voices are discussed from the point of view of discursive institutionalism, stressing in particular the role of ideas and discourse in institutional change. On top of what is here referred to as `discursive readinesses for changes towards more pluralism, strategies for overcoming the difficulties on the institutional level need to be developed.
    Date: 2016–01
  9. By: Massa, Isabella (Overseas Development Institute)
    Abstract: Over the past years, the manufacturing sector has gone through a period of significant technological change. Technological innovation may bring significant socio-economic benefits and improve the environmental prospects, but it may also pose severe challenges to the economy, human well-being, and the environment. The aim of this paper is to review and discuss the existing literature on the economic/social, social/environmental, and environmental/economic trade-offs stemming from technological change in the manufacturing sector, with a focus on developing countries. The policy designs proposed in the literature to minimise the trade-offs arising from technological innovation and to achieve technology-driven sustained economic growth, social inclusiveness and environmental sustainability are also examined.
    Keywords: technological change, developing countries, manufacturing, trade-offs, growth, inclusiveness, social inclusion, social exclusion, environmental sustainability
    JEL: O11 O13 O14 O15 O33 O38
    Date: 2015–12–01
  10. By: Uri Dadush
    Abstract: Industrial policy is a controversial, even taboo, subject in policy circles. Yet it is widely practiced by advanced and developing countries alike. This note tries to make sense of this paradox. It argues that industrial policy can be a useful weapon in the development policy arsenal. However, the effectiveness of industrial policy is more circumscribed than many of its practitioners think, and there are significant risks associated with getting it wrong, especially in a poor governance environment. The reluctance of mainstream policy thinkers to espouse it should be understood in this light. To succeed, industrial policy must conform with certain principles relating to its design and execution.
    Date: 2016–02
  11. By: Gianluca Benigno (Department of Economics, London School of Economics (LSE); Centre for Economic Policy Research (CEPR); Centre for Macroeconomics (CFM)); Luca Fornaro (Centre for Economic Policy Research (CEPR); Centre de Recerca en Economia Internacional (CREI) Barcelona Graduate School of Economics (Barcelona GSE); Departament d'Economia i Empresa Universitat Pompeu Fabra Barcelona Graduate School of Economics (Barcelona GSE))
    Abstract: We provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by unemployment and weak growth. We refer to these episodes as stagnation traps, because they consist in the joint occurrence of a liquidity and a growth trap. In a stagnation trap, the central bank is unable to restore full employment because weak growth depresses aggregate demand and pushes the interest rate against the zero lower bound, while growth is weak because low aggregate demand results in low profits, limiting firms' investment in innovation. Policies aiming at restoring growth can successfully lead the economy out of a stagnation trap, thus rationalizing the notion of job creating growth.
    Keywords: Secular Stagnation, Liquidity Traps, Growth Traps, Endogenous Growth, Multiple Equilibria
    JEL: E32 E43 E52 O42
    Date: 2015–01
  12. By: Gianna Alessandra Sanchez Moretti (IPC-IG)
    Abstract: "If human development is defined as a comprehensive economic, social, cultural and political process aiming to improve the well-being of populations and individuals, then the one element that can serve as the motor driving development is education. However, it is alleged that the international community and governments worldwide do not yet recognise the full potential and transformative power of education as a catalyst for human development, even if education is indeed considered a fundamental human right."(?)
    Keywords: education, sustainable human development
    Date: 2016–02
  13. By: Gries, T. (University of Paderborn); Grundmann, R. (University of Paderborn); Palnau, I. (University of Paderborn); Redlin, M. (University of Paderborn)
    Abstract: Technical change is a major driving force for economic growth and development, thus, technological change and innovations could be a powerful process that opens-up opportunities to increase social welfare and social benefits for societies. Whether in reality opportunities from the process of technical change turn into real and inclusive benefits for a society depends on a number of facts. Hence, in this contribution we focus on the question of inclusiveness for the global process of innovation and technical change. We discuss a number of questions such as: Does technical change in DCs show specific characteristics that affect different groups of labour asymmetrically? Further, for the transfer of technologies to LDCs we ask: What are the channels of technological transfer from DCs to LDCs that allow developing economies to participate in benefits of technical change? How can a transfer of technologies affect economic and social development? After identifying such elements that link technical change to the question of inclusiveness we describe the effects of technical change on inclusiveness in DCs and LDCs. We try to answer questions like: Which groups benefit more or less from gains of technical change? Were benefits inclusive for a major share of the population or could basically small groups take advantage? Which are the reasons that led to non-inclusive growth for a larger share of the population.
    Keywords: innovation, technological change, global technological transfer, structural transformation, industrial development, development, inclusiveness
    JEL: F15 F16 I24 J31 O14 O15 O33
    Date: 2015–11–18
  14. By: Armon Rezai (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria); Sigrid Stagl (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria)
    Abstract: The Great Recession of the past years has brought macroeconomics back. Many of the recession's phenomena, causes and consequences alike, cannot be understood using solely microeconomic decisionmaking. Over the past decades the economics profession has pursued the implications of rational choices and enshrined them in so-called "micro foundations" as a hallmark of modern economic theory. By focusing on the choices and actions of individual consumers, firms, or the government, however, one can easily miss important determinants of the economic system which only arise at the meso- or the macroeconomic levels where institutions, coordination, and complexity in general are important and sometimes even can take on a life of their own. To lesser extent, ecological economics has fallen prone to similar pitfalls by mostly focusing the unit of investigation on low-level, small-scale subsystems of the economy. There are, of course, notable exceptions including the early contributors Boulding and Georgescu-Roegen and the general interest of ecological economists in the field of (ecological) macroeconomics has been increasing.
    Date: 2016–01
  15. By: Olivier Petit (UA - Université d'Artois, CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS - Centre National de la Recherche Scientifique - Université Lille 1 - Sciences et technologies); Franck-Dominique Vivien (Regards - EA 6292 - Laboratoire d'économie et gestion de Reims - URCA - Université de Reims Champagne-Ardenne)
    Abstract: Ecological economics essentially grew out of economists working in the environmental field and growing dissatisfied with the way that standard economics saw interactions between nature and societies and ecologists anxious to take human activities (including economic) into account in a much more direct way, within the dynamic of the ecosystems on which they depend. This clearly inscribed the new field of ecological economics within an interdisciplinary and even transdisciplinary perspective. In order to try to provide some thoughts on the evolution of this trend and the relationship between economists and ecologists, we have chosen to focus on two items 1 that are undoubtedly among the achievements of ecological economics, although their mobilization is far from uniform among the authors who make use of them: coevolution and ecosystem services. In order to do so, the itinerary of two authors recognized in the field of ecological economics will be examined: Richard B. Norgaard, whose work on the coevolutionary paradigm (Norgaard, 1994) is recognized as one of the foundations of ecological economics (Munda, 1997); Robert Costanza, who initiated work on the monetary valuation of ecosystem services 1 For the moment, we would like to use the generic term for the subject. We shall see later that these subjects may be alternatively (and often also simultaneously) used as metaphors, concepts, and instruments of public policy. 2 (Costanza et al., 1997) that is a marker in the field of ecological economics. What unites these two authors is a manifest interest in the work coming out of systems analysis in the 1970s-as we shall see, that interest ultimately led to fairly contrasting visions of the field of ecological economics.
    Keywords: ecological economics,coevolution,ecosystem services,interdisciplinarity
    Date: 2015–06–30

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